THE incoming chairman of Ireland's largest bank is urging a cautious approach to monetary union.

In a book published this week by the Institute of European Affairs, Britain's European Question, Mr Lochlann Quinn, deputy chairman of Glen Dimplex and, from January 1st next, chairman of AIB Group, warns that rushing into the single currency could be risky.

"If the UK, most Nordic states, and Eastern and Mediterranean Europe remain outside for the long term, it is a risky strategy. To remain outside - with the majority - but to continue to operate within the Maastricht criteria and then to join EMU with the second stage entrants could be a very sensible option," according to Mr Quinn, who is the brother of the Minister for Finance.

He also stresses that deciding not to join the single currency does not necessarily mean merging with sterling. The countries that will almost certainly not be part of the single currency include Britain, Spain, Portugal, Italy, Denmark, Sweden and Greece, he says.

He also calls for a broadening of the debate on currency risk, if Ireland joins and Britain stays out. "We are not talking here about whether Irish industry is competitive at a parity of 105p. The question to be asked is more rigorous - are we and can we he, competitive at 150p sterling?"

He points out that, since 1979, the deutschmark has appreciated 35 per cent against the pound while the yen has appreciated 64 per cent.

"We need to be satisfied that, should the same rate of appreciation re occur over a period of 10 years, we can remain competitive and build employment," he says.